Sales tax losses to 'punch hole' in county budget

As the wizards of finance begin to grapple with the fallout from the Covid-19 crisis, it is clear that sales tax revenue — a major component in Nassau County’s 2020 budget — will drop off by at least 4 percent, according to a New York Association of Counties study.

The study, cited in Moody’s Investors Service’s commentary on the Nassau Interim Finance Authority, estimated the loss “could punch a sizable hole of at least $50 million” in Nassau County’s 2020 budget, according to Moody’s Senior Credit Analyst Robert Weber.

Because the county had already estimated a year-over-year increase of $33 million in sales tax revenue, the total loss will likely be more than $80 million, or 2.5 percent of the budgeted general fund revenue for the year, Weber wrote.

Citing the same NYAC study, however, Nassau County Comptroller Jack Schnirman said the sales tax losses could be as high as $180 million, or 12.7 percent of the budget. “No one knows how long this will last or how deep the hole will be,” Schnirman said.

The one bright spot was the quality of NIFA’s credit, Weber wrote. The authority is rated Aa1; Nassau County has a rating of A2 — still solidly investment grade. But NIFA’s higher rating will enable the county to borrow money at lower interest rates — critical in the coming recovery, Weber wrote.

Finally, the 2021 budget for New York State includes provisions for restoring NIFA’s bonding authority. It also extends the Authority’s oversight of county finances to 2051 from 2025, enabling the county to continue to benefit from NIFA’s stronger credit.